Katherine Ziesing | Canberra
Australian Industry Content or Australian Industry Capability? What is the difference? More than meets the eye if you start reading between the lines. While there are many who use the terms interchangeably, they are very separate concepts despite the ubiquitous acronym being exactly the same.
Content refers to exactly that – how much of any given program contains content produced or sourced from Australian Defence Industry? Capability encompasses something wider, more future based. Capability is based on securing and building upon the industrial base necessary to meet current and future Defence capability requirements.
This is a change that Defence has been making for some time internally but I don’t think it has been well communicated outside the organisation. The Centre for Defence Industry Capability (CDIC) is working towards this aim, as outlined in the Defence Industry Policy Statement, but the practical steps are only now being included. In a technical sense the AIC program requires companies bidding for Defence programs of work valued over $20 million to submit an AIC Plan as part of their tender response. The Request for Tender documents will clearly indicate the AIC requirement.
For some time, there was a common complaint that AIC plans (where the C was for content) were ‘toothless tigers’. They were put in place to appease political needs rather than capability requirements. Given that Industry is formally a Fundamental Input to Capability, this outlook is evolving.
“Contracted AIC Plans are binding,” according to the CDIC. “Should your company win work as part of a contracted AIC Plan and you meet the schedule, standards and commitments necessary, you are guaranteed the work. Therefore, it is vital you put your best value and most appropriate solution forward when working with industry partners who wish to be the Prime tender respondent.
“Even after the contract is awarded if you closely monitor the Public AIC Plans on the Defence website there are business development opportunities as the Public AIC Plans are a valuable resource for businesses wishing to identify, understand and engage with defence prime contractors.
“Public AIC Plans describe future opportunities to become involved in Defence capability projects and sustainment activities. Public AIC Plans provide a specific point of contact in the prime contractor’s organisation to discuss business opportunities associated with that contract,” a CDIC statement concludes.
A quick look on the Public Plans website reveals that some of the AIC plans date back to 2012. They are easy to read two-page documents that outline which companies have been engaged, the scope of work for both the prime and locally engaged SMEs, and a rough order of magnitude cost. They also outline future opportunities for the industry to partner on subsequent work packages. It also provides contact details for the relevant prime company for those looking for relevant contact points in a particular program. Defence does not have a monopoly on confusingly large bureaucracy.
In the earlier programs, it was easy to see that this was a time when the C meant content. The later programs (seen since the release of the 2016 Defence White Paper, Integrated Investment Program and Defence Industry Policy Statement) have more of an expression of capability.
CASG and government have whole-heartedly supported this approach since early 2016 and the more recent AIC plans reflect that; the C is very firmly capability from that point onwards. This is not a case of a foreign prime building a platform overseas and then having an Australian SME provide fire extinguishers or brackets to bolt on afterwards.
As I have pointed out before, having a well-formed AIC plan is now a matter of priority for primes. Not engaging with the AIC framework is to admit that you don’t want to work in Australia in a meaningful way. It’s simply bad business.
In the land space, Land 400 is a perfect example of this. Both primes have spent almost as much time refining their AIC offerings as proving the capability of the platforms themselves (see P32 for more on this issue).
AIC, and I use the term with the C firmly in the capability realm, is now part of the foundation for all programs above $20 million. And even below that in an unofficial sense. This is the new norm.
Also, a Defence spokesperson confirmed onAugust 10 that “the IIP website is still under development and will be launched in due course”.